Diversified Real Estate Investors Group with Stephaine Pappas

Mike: Welcome to the flipnerd.com podcast. This is your host, Mike Hambrite. And, on this show I’ll introduce you to VIPs in the real estate investing industry, as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level.
We have three new shows each week, which are available in the iTunes store or by visiting flipnerd.com. So, without further ado, let’s get started. Hey, this is Mike Hambrite, with the Flip Nerd VIP show. Welcome back for another great episode. Today, I have with me Stephanie Pappas, who is the president of the Diversified Real Estate Investors group. It’s an award winning group that operates in the Philadelphia area and before we get started, to learn more about Stephanie and Dig, let’s take a moment to recognize our featured sponsors.

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Hey Stephanie, welcome to the show. Stephanie: Hey Mike. How are you doing? Thanks for having me. Mike: Good, glad you’re on. I never really mentioned this. A lot of guests we’ve had on previously recommend folks to join on the show and you came recommended, so we’re happy to have you here. It’s always good to have somebody that is a friend of a friend, so great. Stephanie: Great, good. Mike: Well, tell us a little bit more about you. I know you’re the president of Dig and involved in real estate in a lot of other ways. But, why don’t you – you’ll be able to introduce yourself a lot better than me. So, tell us a little about you. Stephanie: Okay. Well, to get started, I started out as a stay at home mom, raised my kids, got bored at home and decided I want to be a realtor. So, I got into the business being a realtor. But, I always wanted to flip houses. So, I ended up going to our local group, which is Dig and I just told them, “This is awesome. All these people are all doing what I’m doing and nobody thinks I’m crazy.”
So, my whole family thinks I’m crazy, but – everybody in Dig – we’re all doing the same things. So, I thought it was great and it got me started into flipping houses and I got a couple rental properties and I just absolutely love the business. I’m still a realtor. I like the real estate. But, I really love flipping houses. So –
Mike: Yeah, so you went and – I’ve had other people talk about this before. They had an interest and they got involved in a [inaudible 00:03:17] and eventually became the president of the club. So, tell us a little bit about that transition from newbie with little experience to going to see what the club’s all about one day to ultimately being the president of that club. Stephanie: I started out – I love the group. There’s a lot of great people there. I just thought, “Let’s get more involved.” The more we get involved, the easier it is to meet people. And, the more you get involved, then you get asked to do more things and as you get asked to do more things, you kind of end up drawing a short straw and getting stuck as president. I do love it. It’s a lot of work and we’re a non-profit group so we don’t get paid for doing it. So, it’s volunteer. We love our volunteers and it’s a great way to get to know people. It’s kind of interesting to be drawn into that. It’s not something that I had planned to do when I joined the group. Mike: Right, so tell us a little about your group. How many members do you have?
Stephanie: We’re currently at about 750 to 800 members [inaudible 00:04:20]. In our hay day we were up to probably 1,200 – when the market had crashed and everybody thought, “Let’s get into real estate. It’s easy.” So, everybody came in and the people that found out it wasn’t as easy as calling your stockbroker. They all found out and the people that are there now are dedicated. We have a good mix of people. We have a lot of newbies, but we have a lot of people that have been investing for 20 – 30 years.
Mike: Yeah, well – tell me a little about your – you specifically mentioned that you’re a non-profit. I heard you say that. I know that there’s some distinct differences between non-profit and for profit. And, some people are very opinionated about non-profit and for profit [inaudible 00:05:05] clubs and the balance between education and selling things. But, talk a little bit about your club and maybe how it’s different.
Stephanie: Well, we’re non-profit. But, we also like to focus on our investors and not try to hound them for sales and try to hit the box for these national speakers. National speakers are great. They give you a lot of good information. Unfortunately, they’re there to sell product and selling the product helps keep the [inaudible 00:05:35] in business. So, unfortunately we have to do that. But, we try to fill it in with lots of local speakers. And, our local guys just have better information just because it’s specific to our area. So, there’s not information – well, this works in Florida and this works in California. Everything they do works in Pennsylvania. So, it’s a little different. We just like to focus on the local stuff and the rules change. The laws change. We’ve got, as I’m sure everybody else across the country has, we have issues with the government getting their hands in for licensing and all that kind of crap.
But, it’s a lot easier to fight those groups locally, because you all go and we send that blast to our membership and they tend to go and go to the meetings. Having 30 or 40 investors in the room fighting the castle and telling them why they shouldn’t be making these laws – I think it makes a better impact than somebody coming from out of a strange area and – they’re not going to fight well. Mike: So, what do you think the right balance is between – not just necessarily national speakers, but I know probably more than many. Obviously, I have never led a [inaudible 00:06:54] club, but I know lots of folks that do. And, I know it’s a thankless business. Nobody’s making money on it. Hopefully, there’s some things that are spilling over into other businesses and you’re making sense of it that way. But, it’s not necessarily a bad thing to say that you’re selling things, either, because presumably, things are being sold that people need. I think the days are kind of, somewhat, behind us of the real kind of shady folks that are pumping and dumping a crowd and then go to the back and charge your credit card right now or your life’s over. You don’t let folks like that in anymore. I think folks, more than ever – a lot of the bigger named speakers or guru types have some great things to offer. They need to educate before they promote anything. But, what’s the right balance, do you think, between promoting things for other people and not, I guess?
Stephanie: It’s tough. Now, we’re trying to pick really good speakers. So, like you said, they give good content. They’re not just there to sell. Really, they’re there to care. And, I think if you have really good speakers that give good content, then people don’t mind the sales pitch at the end because they’re really wanting to buy the product. And, I think it’s tough [inaudible 00:08:08]. We have about three speakers a year. And, the rest of the time it’s, basically, local people or we do a lot of panels and stuff that people really like. Because, they’re getting different opinions.
So, it’s tough to find that right mix when there’s other [inaudible 00:08:26] groups out there that are having 12 speakers a year and their people still come back. I think just educating your group, too, and saying, “Unfortunately, we have to sell to you to keep us in business. And, don’t feel obligated to buy.” And, I think people understand that. Mike: Yeah, I always love talking to folks that run [inaudible 00:08:46] clubs because I’m intrigued by what you do, obviously. But, also I’m curious about how folks move forward in this era of so much stuff being online and being able to have webinars, being able to have meetings like this. Now, you’re never going to eliminate the need for people to get together and physically shake someone’s hand and look them in the eye and talk to them and things like that. So, it’s not like [inaudible 00:09:15] clubs are going to go away. But, what are your thoughts on how technology and this era of social media and stuff like that – how that’s changing or maybe how it will change how [inaudible 00:09:26] clubs look and feel and operate. Stephanie: I think the social media thing has just – it’s really taken a lot of membership away from a lot of the groups. If you can get it for free, why go to group? Why pay the money to join? But, I think what happens is, a lot of those people never become successful, because they don’t have the support behind them. So, I think if we jump into the phrase too, and get ourselves out there so people can find us on social media, they’ll end up realizing that they need the extra pat on the back from somebody or somebody hand-holding and actually helping them through projects to get them through the first deal. Most of these people – the stuff you get online is partial information. It’s never [inaudible 00:10:14]. So, I think you just need to – we need to market to those newbies and bring them in. But, also give them enough education that they succeed, otherwise they’re going to go back online and get the stuff for free. Mike: Yeah, and how are you set up? Do you guys have typically, just one general monthly meeting and then you have some additional training here and there sprinkled in, weekends, things like that?
Stephanie: Yeah, we have one general meeting. Then, like I said, we have three national speakers that come and speak and they also lead a Saturday workshop. So, we have them – those [inaudible 00:10:51]. We also have one-on-one classes during the year – four in the spring – four in the fall. We have workshops that we have in addition to those, just sprinkled in, like you said – here and there. We also have close to 20 sub-groups or focus groups that meet during the month.
So, those are our groups that get together and maybe 20 – 30 people in a room – sometimes less. Some of them have 5 or 6 people that come regularly. And, it’s a great support group because you get to know people personally. You know them by first name. You know their family. You know their personality and you’re willing to do business with them. Mike: And, you say those are specific topics? Are they –?
Stephanie: Some of them, like commercial or we have the social media sub-group. A lot of them are just local. So, if you invest in Fox County and there’s lower, central, and upper. If you’re in a lower area, we get together and we have a lower sub-group. And, it’s specific to issues that we have with them. So, getting UNOs to use and occupancies to the townships and stuff like that. How do you do it? What can we do to change that? And, that kind of thing, so—
Mike: So, are you an active investor yourself?
Stephanie: I am. I like to flip houses and I’ve done over 30 projects so far and I’m looking for one right now. Market’s a little tough for finding them. But, definitely looking to do another project and I have a couple rental properties – love my tenants. They’re great, but a lot of work sometimes. Mike: So, tell us a little bit about the relationship with national [inaudible 00:12:40]. I know you have some affiliation. I know they have different levels of relationship, like charter members and things like that. But, I know that you have some affiliation there. How does that work and how does it benefit you? How does it benefit them? Tell us a little bit more about that. Stephanie: Okay. Well, we’re a chapter member of national [inaudible 00:12:57]. That gives us a lot of extra benefits that not everybody can offer. We love our Home Depot benefit, which is one of the best benefits out there, I think. They offer a lot of support for us. They do a lot of [inaudible 00:13:14] training. So, you can get trained on how to be a better [inaudible 00:13:16] group, which is invaluable to us because we go and we share with other groups what works, what doesn’t work – and, things that worked ten years ago isn’t working now. So, how do we change and stay current and not do the same old thing we always did? So, we’re looking for ways to upgrade and update and just webinars alone have come in in the last couple years and a lot of groups are just using them like – we’ve done one – not done a lot but we’re looking to do more of them because I think people – it’s hard to get out because kids are busy doing sports and both husband and wife are working now, most of the time. He gets to go to the meetings and I get to stay home jammies and watch videos. Mike: So, you’re saying that’s a movement you see, is [inaudible 00:14:08] clubs using a lot more webinar type tools or type products?
Stephanie: I think so. I think if they’re going to go to the website and watch it anyway, they may as well watch it through us and get good information that we have pre-screened. We like to pre-screen out speakers and give quality. I don’t like just somebody coming in and just selling their pants off. And, everybody’s like, “I can’t stand that guy.” I’d rather have people that – we get people coming and saying, “Hey, he was great. He gave a ton of information.” That whole sales thing goes out the window. And National has screens for that. We get together and talk other ring groups about, who did you have, who was good, who did you like? So we give them good information, who’s there. So just that alone is a great relationship. We changed our group probably 100% since we’ve been going to the National Rea screenings.
Mike: Yeah, yeah, that’s great. So you mentioned something about it’s tough to buy houses right now. I think people are feeling the pressure and a lot of markets around the country just with the improved sales market, if you’re in a market where there is a lot of building going on for years that’s kind of been dead for a few years. There is some shortage of inventory coming from builders coming out because they are trying to ramp back and hedge funds buying a lot of stuff, and things like that. What are the pressures you’re seeing in Philadelphia?
Stephanie: We’re having a hard time finding stuff to buy. The banks don’t want to come down on the prices too much. There is enough inventory, but there is a lot of short sales, and those things aren’t really willing to take the short sale offers. We have a lot of building going on, so you don’t want to invent in the city of Philadelphia. I’m in the suburbs and the competition is just horrible out there.
Mike: Fierce huh?
Stephanie: There’s just nothing to buy, there’s just—we’re all fighting over the same things, the same properties when they come out. So it gets tough and the market has picked up and we’ve had snow storm after snow storm so I’m surprised people are out. It’s been busy and our builders go easy up here, we’ve got company construction going on, so it’s a big market, hopefully it will stay strong like it is right now.
Mike: Yeah, yeah. Talk a little bit about – I know Philadelphia and Pittsburg is not cities where this comes up a lot. You are a very different investor if you invest in the inner city verses the suburbs and things like that. Talk a little bit about Philadelphia specifically, like some of the different areas to focus on that some people stay away from and they don’t want to go there, or they do.
Stephanie: Yeah, we have some things like any other big city, we’ve got a lot of rough areas that most people stay out of. But there is stuff there all the time. But not everybody wants to invest there. Mike: Right, right. Stephanie: I mean, you could buy stuff down there for $5,000-$10,000 and then we have other areas of the city that have just taken off in the last few years. You’re buying stuff down there that retails for five-six hundred thousand dollars for a home in the city. It’s mind boggling to me, because it’s really hard to picture those things that you were selling 15 years ago for $50,000 and getting $100,000. But there’s a lot going on down there, a lot of city work building on lots and programs and three and four property buildings, brand new town homes and stuff like that. So there is some really good areas to invest if you’re looking to do new construction or re-build. There are shells out there, there’s a lot going on so you can do anything in the city. You can build on land if you want, there are people doing really well in rentals and very successful. All the way up to people just doing their own projects down there as well.
Mike: Yeah, yeah. That’s good because there are some markets where the inner city part is just dead. I won’t say any names, but there are some markets that no body wants to go into. Well folks want to find out more about your club, where do they go?
Stephanie: They can go to buildonline.org. and we have a website there the benefits and stuff are on there so they can look up what we have to offer. The classes and our speakers are on there, we have a lot there to offer. We’ve got tons of benefits that make it all worth doing it but the biggest one is the networking. I couldn’t have ever started this if I didn’t have support of the group. It’s just being able to ask people questions, like you’re doing. They can go to our website or email me and I’ll personally call them if they want to talk me and try to get them started.
Mike: That’s great and I think I mentioned the other day, and it’s no secret, I’m a big supporter and even myself I got started by moseying into a rea club to see what this is all about and it just kind of opens up a new world. Like you said, all of a sudden your surrounded by people who don’t think your crazy. And we have friends and family member that thought, what are you doing, why would you do that? That doesn’t make sense, no body is making money, you’re going to lose money. No body knows, there are a lot of nay-Sayers out there. Stephanie: It is addicting though when you get into it, it’s really hard to just – I mean we’re just so – you just fall in love with the whole business. The challenge of finding projects and making them work, you either love it or you don’t.
Mike: Yeah, yeah. What would you say for folks even in other markets, if they’re looking for a rea club, what they should look for in terms of what the club might be. Stephanie: Okay, I think it just involves, not necessarily the size of the group, but how active they are. Are people actively doing stuff or is everybody sitting there whining and saying, I can’t find a project. They have to be actively doing stuff, I think it has to be exciting, I think you have to feel comfortable with the group. But the most important thing is get involved from the get-go and go to as many meetings as you can and enjoy the benefits and get to know people. Because if you sit on the sidelines and expect all that stuff to just filter into your head, it won’t. You have to work at it. If they’re interested there are plenty of exciting groups out there and there is a lot of dead ones, spend a little money, go to the better groups and get to know people that are active and really doing it. Mike: For a club like yours, I have no idea what your fees are so hopefully I’m not catching you off guard. But do you charge an annual fee to join the meetings?
Stephanie: We charge $150 annually to come and that includes 100s of benefits, all the sub-groups, discounts on the classes that we run, so it’s worth it. I know some of the benefits have paid my dues over and over and over again.
Mike: So $10 or $12 a month, that’s nothing. I bought a $6 coffee this morning. Stephanie: And we have plenty of sub-groups you can go to.
Mike: That’s fantastic.
Stephanie: You could get into 21 meetings a month. And it’s a bargain, it’s a bargain. Just to go online and get free stuff it’s not worth it because you don’t get everything you need there.
Mike: Yeah, great. Awesome, well I appreciate you joining us today and learning more about you, learning a little bit more about dig, I appreciate it.
Stephanie: No problem, thanks for having me. I appreciate it.
Mike: Yeah. I hope you have a great week.
Stephanie: You too. Mike: Alright, we’ll talk to you later.
Stephanie: Bye-bye. Mike: Bye.
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